The CSRD as a significant step towards sustainability

The Corporate Sustainability Reporting Directive (CSRD) is an EU directive that brings about a significant change in sustainability reporting for European companies. It requires sustainability information to be integrated into the management report and treated at the same level as financial reporting, including verification by auditors.

The CSRD improves the comparability and transparency of sustainability performance, allowing companies to be assessed more clearly in terms of their sustainability performance by stakeholders such as investors, customers, authorities and NGOs.

From 2024, over 39,000 EU companies will have to integrate their sustainability reports into the management report in accordance with the European Sustainability Reporting Standards (ESRS).

The CSRD is intended to make reporting more transparent and reliable, raise it to the level of financial reports and thus promote sustainable business and social responsibility. To this end, companies must systematically record and disclose up to 1,200 data points, including Scope 3 emissions.

Non-compliance can result in penalties of up to 5% of turnover, while compliance can lead to incentives and competitive advantages.

The CSRD requires reporting in accordance with the European Sustainability Reporting Standards (ESRS). These are divided into three main areas: environmental, social and governance (ESG):

The CSRD represents an extension to the Non-Financial Reporting Directive and also increases the number of companies affected from approx. 11,600 to approx. 50,000.

The new obligations associated with the CSRD are:

• Quantification of report content through key figures: For improved measurability, sustainability reports are to be quantified using specific key figures.
• New understanding of materiality (dual materiality): The directive requires companies to discuss and present any impact of their actions on both the environment & society (inside-out), as well as the impact of their sustainability issues on the financial position of the company itself (outside-in).
• Standardized electronic reporting format (ESEF): According to the directive, companies are obliged to publish their sustainability reports in the European Single Electronic Format (ESEF). This measure is intended to ensure the readability of the reports for both humans and machines.
• Auditing of sustainability reporting: As with financial reporting, sustainability reporting must now also be subject to an external audit. The EU Commission has defined audit standards for this process.

Companies face the challenge of adapting their internal processes to enable comprehensive and accurate reporting. The core challenges include integrating sustainability aspects into existing reporting systems, ensuring data quality and availability and developing a coherent communication strategy that meets the requirements of stakeholders.

Consideration of the entire value chain requires close cooperation with partners and suppliers. Against this backdrop, it is crucial to develop strategic approaches that not only aim to fulfill the requirements of the CSRD, but also lay the foundation for continuous improvements in the area of sustainability. The aim is to anchor sustainability as an integral part of the corporate strategy and thus secure long-term competitive advantages.

In order to efficiently and pragmatically address challenges while making the most of opportunities, we support you end-to-end with customized solutions. We are at your side throughout your entire sustainability journey, from identifying key sustainability issues to creating and implementing thematic sustainability strategies and embedding them in cross-company performance management.

Our specialized consulting services cover the following key areas: